The National Pork Producers Council (NPPC) today called for an end to Canadian government subsidies to Canadian hog producers. Jon Caspers, a pork producer from Swaledale, Iowa and a past president of NPPC stated, “The U.S. Commerce Department recently confirmed that Canadian hog farmers have and continue to receive substantial subsidies which injure U.S. hog producers.”
In its investigation, the Commerce Department found that there are more than a dozen subsidy programs available to Canadian hog farmers. Most notable are the income stabilization programs that are designed to compensate Canadian hog farmers for their losses. In the last few years, more than $100 million has been distributed to Canadian hog farmers under these income stabilization programs alone.
Caspers stated, “In a preliminary analysis, the Commerce Department found that these subsidies were not ‘illegal’ because other agricultural industries also received some benefits. Although NPPC disagrees with the Department’s preliminary analysis, nonetheless, the investigation demonstrates that Canadian hog farmers have received, and continue to receive, substantial subsidies.” Dermot Hayes, an economics professor from Iowa State, has estimated that the Canadian hog farmers receive benefits ranging from $4 to $6/pig for the federal subsidy programs and that Quebec producers receive as much as $15/pig. A more detailed analysis of these figures is provided in a paper that is being released today by NPPC.
“The Canadian subsidies eliminate the bottom side of profitability cycles since it places a floor under income levels. Again – the Canadian hog farmer can’t lose. Their government guarantees them an income no matter what. In contrast, U.S. hog farmers can’t win,” Caspers continued. “As exports from Canada flooded the market in 2002 and 2003, U.S. producers responded to economic conditions, cut back their herd size and suffered serious losses. Even as economic conditions improve, the oversupply in Canada forces profits and prices to be lower than what they would otherwise would be if the Canadian government had not artificially reduced the risk faced by Canadian hog producers.
“U.S. prices and profitability will continue to be suppressed as long as these trade-distorting subsidies continue. This gross inequality in the marketplace should stop. We urge the Canadians to eliminate these harmful subsidies,” stated Caspers.
The National Pork Producers Council is one of the nation’s largest livestock commodity organizations. It has producer members in 44 affiliated state associations and provides a unified voice for America’s pork producers on a wide range of industry and public policy issues. NPPC’s website is at www.nppc.org.